Needed, a comprehensive farm policy

G Chandrashekhar | Updated on February 19, 2021 Published on February 19, 2021

For sustained and sustainable growth in agri-sector, a bits-and-pieces approach will not work

In the heat generated by farmers’ protests over the agri-market reform laws, the internal contradictions in the country’s farm sector policies seem to have faded into the background.

The Prime Minister has promised to double farmers’ incomes by 2022, indeed a laudable vision. But in the absence of a concrete strategic action plan, the vision remains just that — a vision whose value per se is rather limited.

Farmer incomes cannot be doubled by merely hiking the minimum support price (MSP) for specified crops season after season as appears to be the case now. MSP hikes unrelated to market conditions will create other challenges. Raising yields is one sure way to improve farmers’ incomes; our yields (of rice, pulses, oilseeds, etc.) are pretty low by global standards. Where is the push for yield increase?

On its part, the Commission for Agricultural Costs and Prices (CACP) keeps recommending an annual hike in the MSP for specified crops currently numbering 23. To arrive at the MSP recommendation, the CACP conducts a detailed exercise including examination of input costs and other related expenses. Consultations with stakeholders are also carried out.

However, in the final analysis, the MSP for crops announced by the government season after season seems to be divorced from ground realities. The MSP has a tenuous relation with global and domestic market conditions. It is clear that the MSP regime, as currently practised, has failed on multiple counts.

It has miserably failed to bring about any meaningful shift in the cropping pattern. It has failed to encourage growers to shift from one crop to another based on the MSP guarantee. Often, farmers may not even be aware of MSP and more often than not, in the last 20 years or so, MSP announcement had been made well after the South-West monsoon hits the southern coast.

The MSP should be treated as a sovereign guarantee; and if it is not a sovereign guarantee, do not expect the growers to be concerned about it. In the event, the MSP turns out to be a gimmick played season after season. Again, not all growers across the country uniformly benefit from procurement at MSP. It is highly biased in favour of certain regions and certain crops. Parts of the country face the high risk of environmental degradation. Also, the procurement infrastructure currently available is clearly unequal to the challenge of enforcing the MSP across the country.

It is another matter that there are a wide range of crops outside the MSP regime and procurement system. How the government plans to help growers of those crops in doubling their incomes is anybody’s guess. The wide inter-State or inter-region disparity in average incomes earned by farmers is another issue.

Then, agri-exports. The government is keen to double agri-exports to earn about $60 billion annually. But how can we increase exports when MSP for crops is hiked indiscriminately which renders our products uncompetitive in the global market? It is the rupee’s weakness that often helps Indian exporters and not any intrinsic cost and quality competitiveness of our crops. And now it will be an offence for anyone to purchase below MSP even if the grower is willing to sell.

Export policy

Worse, in agri-exports, we follow a now-on, now-off approach, which shakes the confidence of overseas buyers about the reliability and predictability of India’s export policy.

In sum, there are internal contradictions in our farm policies. Different ministries — Agriculture, Food, Commerce, etc — work in silos. We need a coordinated approach.

We must recognise that the farm sector is beset with multiple problems. If we continue in the ‘business-as-usual’ manner, sustainability of farming would be seriously compromised.

Although welcome, the recently enacted agri-market reform laws are nothing but bits and pieces legislation that ignore the real big picture and the multiple dangers associated with farming in the country. Land constraints, looming water stress and climate change are challenges that will have to be tackled head-on. Merely tinkering with some aspects of agri-markets may deliver very limited outcomes; ignoring the big picture for short-term gains would compromise the country’s food and nutrition security.

India needs holistic, comprehensive, end-to-end solutions to its myriad agriculture issues. For such a solution to emerge, stakeholder consultation is critical. Even if it takes the whole of 2021 to undertake consultations with different stakeholder groups, it may be time well spent as the learnings and outcomes will be far superior to what’s available at the moment.

The Prime Minister must seize the initiative to set off a national discussion for evolving a long-term agricultural policy that is designed to deliver sustained and sustainable outcomes. The social, economic and political benefits are sure to flow.

The writer is a policy commentator and agribusiness specialist. Views are personal

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Published on February 19, 2021
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